TUĞÇE ÇAY Industrial Engineering Department, Dokuz Eylul University, Turkey

Introduction to Operations What is Operations Management? Operations management (OM) is defined as the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services. company

What is Operations Management Role? OM Transforms inputs to outputs –Inputs are resources such as People, Material, and Money –Outputs are goods and services To convert, to change

OM’s Transformation Process

OM’s Transformation Role To add value –Increase product value at each stage –Value added is the net increase between output product value and input material value Provide an efficient transformation –Efficiency – perform activities well at lowest possible cost

OM at the core of Businesses Three basic functions –Operations/Production Goods oriented (manufacturing and assembly) Service oriented (health care, transportation and retailing) Value-added (the essence of the operations functions) –Finance-Accounting Budgets (plan financial requirements) Provision of funds (the necessary funding of the operations) –Marketing Selling, Promoting Assessing customer wants and needs Organization Finance Operations Marketing The center of an object directed, guided

Marketing-OM-Finance should work together Operations Finance Marketing Accounting Industrial Engineering Operations Maintenance Public Relations Personnel Purchasing Distribution

Responsibilities of Operations Management Planning –Capacity utilization –Location –Choosing products or services –Make or buy –Layout –Projects –Scheduling –Market share –Plan for risk reduction, plan B? –Forecasting SUPPLY SIDEDEMAND SIDE Controlling –Inventory –Quality –Costs Organization –Degree of standardization –Subcontracting –Process selection Staffing –Hiring/lay off –Use of overtime –Incentive plans reward Standardization is the ability to realize in practice in the short run as well as in the long run a set of methods and conditions that makes possible repeated high performance.

OM Decisions All organizations are based on decisions Decisions follow a similar path –First decisions very broad – Strategic decisions Strategic Decisions – set the direction for the entire company; they are broad in scope and long-term in nature –Following decisions focus on specifics - Tactical decision

OM Decisions Tactical decisions focus on –Specific day-to-day issues Resource needs, schedules, & quantities to produce –Tactical decisions are very frequent. –Strategic decisions are less frequent. –Tactical decisions must align with strategic decisions.

OM Decisions

OM in Practice OM has the most diverse organizational function. Manages the transformation process. OM has many faces and names such as; –V. P. operations, Director of supply chains, Manufacturing manager –Plant manager, Quality specialists, etc. All business functions need information from OM in order to perform their tasks.

Today’s Essay Topic Explain the relationship between operations management, marketing and finance in an organization.